By Fast Brokers – The EUR/USD has popped back to its psychological 1.45, backed by strong volume during the Asia trading session. Investors sold off the Greenback across the board after China’s solid Trade Balance report. Investors were encouraged by the huge increase in imports to China, a sign consumption in the country is heating up. This is a positive development for struggling developed economies. Furthermore, the Trade Balance signaled a sizable increase in exports, also a positive sign in terms of consumption around the globe. The increase in imports did outpace the recovery in exports, implied by the weaker than expected overall Trade Balance figure. The continuation of China’s brisk recovery has spurred a bit of speculation and this is why we saw the pop in the risk trade during the Asia trading session.
Meanwhile, the EU did print a better than expected French Industrial Production number, an encouraging development considering last week’s stream of EU data left something to be desired. The EU should be relatively quiet on the wire until Thursday’s ECB monetary policy meeting. Despite recent sluggish data, there is presently little reason to suspect that the ECB will remove its foot from the breaks of liquidity. Hence, the Euro is experiencing a solid rally in anticipation that the ECB will either keep its policy unchanged or reign in another alternative liquidity program. The EUR/USD’s rise back to the 1.45 range is a welcome occurrence for Dollar bears. Furthermore, the EUR/USD is trading back above our 3rd tier trend line, an important measure since it runs through July 2009 lows.
Technically speaking, we’ve readjusted our downtrend lines to compensate for today’s nice topside breakout. That being said, the EUR/USD does have quite a bit of room to make up for considering the extent of December’s decline. Therefore, the EUR/USD does have some more obstacles to overcome, including 12/16, 12/14, and 12/11 highs. Meanwhile, the EUR/USD has broken through previous January highs after building a solid based above December ’09 lows. The EUR/USD has bought some more breathing room to the downside in the process, including multiple uptrend lines along with 1/8 and 12/22 lows. Furthermore, the psychological 1.45 level could become a technical cushion should the EUR/USD piece together an extended intraday rally.
Present Price: 1.4506
Resistances: 1.4549, 1.4573, 1.4599, 1.4634, 1.4653, 1.4684
Supports: 1.4499, 1.4476, 1.4460, 1.4425, 1.4388, 1.4363
Psychological: 1.45, December highs and January lows
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